02114cam a22002297 4500001000600000003000500006005001700011008004100028100002500069245008700094260006600181490004100247500001900288520121700307530006101524538007201585538003601657710004201693830007601735856003701811856003601848w0605NBER20170818013040.0170818s1980 mau||||fs|||| 000 0 eng d1 aSummers, Lawrence H.10aTax Policy and Corporate Investmenth[electronic resource] /cLawrence H. Summers. aCambridge, Mass.bNational Bureau of Economic Researchc1980.1 aNBER working paper seriesvno. w0605 aDecember 1980.3 aThis paper overviews the issues connected with proposals to spur investment using tax incentives. There are four main conclusions: (1) The rate of net capital formation in the U.S. has declined very substantially. This decline has been associated with a sharp fall in the after tax return to investors in the corporate sector. (2) Increasing the share of output devoted to business capital formation would not have a large effect on the rate of productivity growth, inflation or employment. However, it would contribute substantially to intertemporal economic efficiency. The welfare gains achievable through investment incentives approach $100 billion. (3) Measures to spur investment are likely to have substantial effects. The lags are, however, very long. For example, it is estimated that the elimination of capital gains taxes would raise the capital stock by 29 percent in the long run, but by only 4 percent within five years. (4) Through judicious design of tax policy, it is possible to spur investment with only a small revenue cost. It is crucial to take account of the effect of anticipated policy on the level of investment. Traditional Keynesian econometric approaches are ill-suited to this goal. aHardcopy version available to institutional subscribers. aSystem requirements: Adobe [Acrobat] Reader required for PDF files. aMode of access: World Wide Web.2 aNational Bureau of Economic Research. 0aWorking Paper Series (National Bureau of Economic Research)vno. w0605.4 uhttp://www.nber.org/papers/w060541uhttp://dx.doi.org/10.3386/w0605